Metals Finance to acquire north Queensland nickel project

Metals Finance (ASX: MFC) has inked an option agreement to acquire 100% of the Lucky Break Nickel Project from Metallica Minerals (ASX: MLM) for a cash consideration of $1 million.

The project has a 10 year mine life with a net present value of $22 million and an internal rate of return of 40% at a discount rate of 12.5%, on the basis of the assumptions incorporated into the previously completed Definitive Feasibility Study.

Lucky Break will produce around 670 tonnes of nickel cathode per annum with annual revenue of around $18 million.

The option agreement allows Metals Finance subsidiary Nickel Developments to exercise the option to acquire the project by 28 February 2014.

The two mining leases are contiguous and are held by NORNICO Pty Ltd, a wholly owned subsidiary of Metallica Minerals.

The option agreement includes both mining leases that are on 100% freehold land.

Extensive testwork

Nickel Developments has undertaken extensive testwork at Lucky Break including laboratory analysis along with the construction and operation of a pilot plant facility.

The company has designed and implemented a hydrometallurgical flowsheet that can economically process nickel laterite ores – the flowsheet being a combination of atmospheric leaching, Ion Exchange technology and electrowinning.

This has the capability to recover nickel from laterite ore to produce an LME grade nickel cathode product.

Research and development by Nickel Developments in the area of nickel laterite treatment has demonstrated the ability to deploy a low operating cost and low capital intensity project.

The option agreement for Lucky Break is a step forward as Nickel Developments seeks to attract project funding to commence construction and production at the project.

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